The Iowa House has passed a bill that provides a tax break to Iowa business owners who sell at least 30 percent of their company to their employees.
Representative Mark Lofgren, a Republican from Muscatine, says Employee Stock Ownership Plans are a “big benefit” for workers.
“Being an owner in the company, it’s very likely that the employees will be very involved in the community,” Lofgren says. “…It’s always good to have skin in the game as far as motivation at the company.”
Lofgren says there is research showing there’s a bottom-line benefit to business owners who sell company stock to employees
“There’s increased firm productivity, profitability and longevity of employees,” Lofgren says, “so that will save the company money.”
The proposal to erase state-level capital gains taxes on business owners who sell at least 30 percent of their company to their workers cleared the Iowa House with overwhelming bipartisan support. Representative Kirsten Running-Marquardt, a Democrat from Cedar Rapids, says the hope is that tax break will encourage Iowa business owners to sell local when they decide to retire.
“This program has the potential to be a strong economic development tool for rural Iowa as we face retirements, turn-overs and as we move our state’s economic development ahead,” she says.
The bill sets aside $1 million for the Iowa Economic Development Authority. The money is to be used to hold seminars and help business owners through the process of setting up Employee Stock Ownership Plans.
Governor Branstad sketched out this idea during his “Condition of the State” speech in January, as part of his economic development initiatives.